OT-Income Tax info Medical Miles Up and ETC...

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WASHINGTON — For 2009, personal exemptions and standard deductions will rise

and tax brackets will widen because of inflation adjustments announced today

by the Internal Revenue Service.

By law, the dollar amounts for a variety of tax provisions must be revised

each year to keep pace with inflation. As a result, more than three dozen tax

benefits, affecting virtually every taxpayer, are being adjusted for 2009. Key

changes affecting 2009 returns, filed by most taxpayers in early 2010,

include the following:

* The value of each personal and dependency exemption, available to

most taxpayers, is $3,650, up $150 from 2008.

* The new standard deduction is $11,400 for married couples filing a

joint return (up $500), $5,700 for singles and married individuals filing

separately (up $250) and $8,350 for heads of household (up $350). Nearly two

out

of three taxpayers take the standard deduction, rather than itemizing

deductions, such as mortgage interest, charitable contributions and state and

local

taxes.

* Tax-bracket thresholds increase for each filing status. For a married

couple filing a joint return, for example, the taxable-income threshold

separating the 15-percent bracket from the 25-percent bracket is $67,900, up

from $65,100 in 2008.

* The maximum earned income tax credit for low and moderate income

workers and working families with two or more children is $5,028, up from

$4,824.

The income limit for the credit for joint return filers with two or more

children is $43,415, up from $41,646.

* The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

*

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IRS Announces 2009 Standard Mileage Rates

IR-2008-131, Nov. 24, 2008

WASHINGTON — The Internal Revenue Service today issued the 2009 optional

standard mileage rates used to calculate the deductible costs of operating an

automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car

(also vans, pickups or panel trucks) will be:

* 55 cents per mile for business miles driven

* 24 cents per mile driven for medical or moving purposes

* 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower

than rates for the second half of 2008 that were raised by a special

adjustment mid-year in response to a spike in gasoline prices. The rate for

charitable

purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5

cents in the second half. The medical and moving rate was 19 cents in the

first half and 27 cents in the second half.

The mileage rates for 2009 reflect generally higher transportation costs

compared to a year ago, but the rates also factor in the recent reversal of

rising gasoline prices. While gasoline is a significant factor in the mileage

rate, other fixed and variable costs, such as depreciation, enter the

calculation.

The standard mileage rate for business is based on an annual study of the

fixed and variable costs of operating an automobile. The rate for medical and

moving purposes is based on the variable costs as determined by the same

study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle

after using any depreciation method under the Modified Accelerated Cost

Recovery

System (MACRS) or after claiming a Section 179 deduction for that vehicle. In

addition, the business standard mileage rate cannot be used for any vehicle

used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using

their vehicle rather than using the standard mileage rates.

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